Minister slams banks over recession

Labour's minister for the City has launched the Government's most outspoken attack yet on the banks, for their part in causing the economic recession.

Lord Myners blamed "mismanagement" at the banks, where senior executives were "grossly" overpaid and had little sense of the society around them.

He told The Times he could see no economic justification for the "exponential" rises in banking executives' pay over the past 20 years and said that there should be no return to the massive bonuses paid out by the banks.

"The golden days of huge bonuses in the investment banking arms are gone," he told The Times.

Lord Myners also revealed that the banking system came close to a collapse in October last year when the Government stepped in with a £500 billion rescue package to shore up confidence.

"We were very close on Friday, October 10," he said. "There were two or three hours when things felt very bad, nervous and fragile.

"Major depositors were trying to withdraw -- and willing to pay penalties for early withdrawal -- from a number of large banks."

Asked if misbehaving banking bosses should pay back bonuses or lose knighthoods, Lord Myners said "that's a decision for individuals".

He said: "I have met more masters of the universe than I would like to, people who were grossly over-rewarded and did not recognise that. Some of that is pretty unpalatable.

"They are people who have no sense of the broader society around them. There is quite a lot of annoyance and much of that is justified. Let us be quite clear: there has been mismanagement of our banks."